Stability and Perfection in Constrained Weighted Network Games
Julien Fixary, Rémi Castera, Rida Laraki
We introduce a general framework of constrained weighted network formation in which agents allocate resources across coalitional interactions while facing feasibility constraints. More precisely, we allow arbitrary coalitions of agents to be assigned a continuous weight, and we incorporate both coalitional capacity constraints and individual budget constraints into the model. This framework extends the weighted network formation model of Bich and Morhaim by combining continuous interaction intensities with endogenous feasibility restrictions. Within this setting, we introduce a new notion of stability -- called coalitionwise stability -- extending pairwise stability to constrained network games. Under standard continuity and componentwise quasiconcavity assumptions on payoff functions, we establish the existence of coalitionwise stable networks. We then investigate refinements of stability inspired by the notion of perfect equilibrium introduced by Selten, and by the notion of perfect pairwise stability developed by Bich and Teteryatnikova for network games. The presence of feasibility constraints fundamentally alters the geometry of the feasible set, which no longer possesses a product structure. As a consequence, trembling-hand type refinements become substantially more delicate, since perturbations of some interactions may render other interactions infeasible. Nevertheless, we introduce constrained analogues of both the trembling-hand and perturbative notions of perfect stability considered by Bich and Teteryatnikova, and study their existence and their relationship. In particular, we show the equivalence between these trembling-hand and perturbative formulations under some componentwise monotonicity assumption.
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